Disclaimer: Investing involves risk so you can lose money. The information in this post is meant to educate you and is just my opinion. This is not a solicitation so I will not be held liable for any money lost.
A very interesting article appeared on CNN Money about the nature of insider trading by officials of major corporations these past few months.
Insider trading can be a useful indicator of what people “in-the-know” think about how the market is pricing the future prospects of their respective companies. With this information you-the person not “in-the-know” can make better-informed investment decisions. For instance, you would have made money if you followed the actions of insiders, who were heavily buying shares of their respective companies’ stock back in February and March when stock prices were bottoming.
The article mentions that the degree that insiders are selling their respective companies’ stock has not been this high since the time just before stock markets around the world first began to buckle in the summer of 2007. This is quite alarming because people who know exactly how the economy is faring and how their respective company is fairing believe that the future is not nearly as bright as what investors believe. With such a large number of people believing the same thing the degree of insider selling is an indication that the stock market is quite overvalued at this moment. Therefore, if you have money available to invest now this would not be a time I would be looking to commit much of that money towards stocks. If you have all of your money invested in stocks I would consider reducing the amount you have invested in stocks.
There are other reasons that I would not be surprised that stock markets around the world begin to fall.... However, for now, I will leave you with a link to someone who I listen to each week who can explain the situation a lot better than I can:
